Long-time bull Jeremy Siegel said the US stock market could lose 20% in a full-bore trade war with China, but would gain 10% if animosities are resolved.
Siegel, a Wharton School finance professor and author of the classic “Stocks for the Long Run,” told CNBC Thursday that a dire market response would result if President Donald Trump goes ahead with his threat to impose an additional $200 billion in tariffs on the Chinese.
Such a move would touch off a drop that marks a bear market, he warned. By contrast, a resolution to the spat would result in an upside that’s half as large as in the bearish scenario, he said. “If we could get resolution with China, this market could pop 10%,” Siegel said.
This came amid word that US-China trade negotiations will resume later this month. The world’s two largest economies have slapped tariffs on each other’s goods, which along with Turkey’s problems, have hurt stocks in recent days. The trade-talks news buoyed the market Thursday.
Siegel also said he didn’t expect stocks to get close to last year’s 19.4% increase on the S&P 500. In late 2017, he forecasted that stocks would be flat to 10% up in 2018.